A different approach

I have discovered a different investment vehicle from typical trading which seems to suit a trading style that I am working on.  They are called binary options, and I am working on improving an already working (so far) stradegy for trading 60 second binary options.  You can follow my progress at tradertuition.com

Someone tripped over the power cord

What an unreal unraveling of the market today!  The SPY was dropping off a cliff, caused by PG company stock puking its guts out, from a hedge fund short circuit, dogs and cats- living together, mass hysteria!  I was shaking my head the rest of the day.  Just wow.

Here's what CNBC are calling the culprit:

According to multiple sources, a trader entered a "b" for billion instead of an "m" for million in a trade possibly involving Procter & Gamble 

It goes on to say "the erroneous trade may have been made at Citigroup"...I wonder how much losses resulted in this mistake?  A sell market order for over a billion shares?  It made over a 20 point move during the sell off...I would hate to be that guy.

I wonder if that is an accurate tick, that almost is too hard to believe if it is.

The SPY was ripped open as well, the big elevator shaft in the middle of the chart, followed with an incredible price swing from off the bottom.  The resulting move took the SPY back 9.3 points (in 3 minutes 33 seconds!)

Time and sales of the tops and bottoms

Just unreal  

As far as my savings go - I will have a pretty good May (even with having the decent expenditure to get some car repairs for state inspections) which is great since I will be able to execute on my plan to consolidate my debt into my 401k faster.  Now to stay on track I next need to set up a budget...more to follow with that.

Fine tuning

I think my initial proposal was a good one, and it lays some pretty good groundwork for getting my debt paid down smoothly and quickly.  I was thinking about the most economical way of paying down my debt would need a bit more fine tweaking.

My largest concern is the high interest rate on my credit card, I will need to verify the % APR, but my card was one of the thousands that the credit card company sent out a letter saying they were about to raise rates, and I could cancel the card altogether if I didn't agree to the terms.  No one to blame here but myself for the account balance, but I felt a bit dirty when that happened, and now I am paying somewhere in the ballpark of 20%.

Now I don't have a bond calculator to make this into an exact calculation of interest paid, but a $7,500 account balance at that rate is about $125 per month in interest alone.  That's actually more than my car insurance and my cell phone bill together.

What I will do to change my strategy is to pay off my small 401k loan first, which could be done in about 2 months at the rate of savings I am shooting for.  Then I would look to take out a bridge 401k loan (I can have a max of 2 out at a time) to pay off my credit card completely.  This way I would no longer carry a credit card balance in about 2 months time, I would then be set to handle my accounting by funneling all expenses through the credit card asap, and lastly save myself some cash in interest.  However the downside is I would significantly reduce my 401k balance for the time being. While I do not see much upside to the market in the next few months and if it does drop, I can average back in at a lower price in my 401k...but a big missed opportunity if the market does continue to climb.

This move should save me a few hundred dollars in credit card interest, and also convert all the debt into very low interest loans, setting me up for an easier payoff time.

Plan of attack

My official start date for tracking my progress will be on May 1st.  For personal financial reasons, I have 1 more paycheck essentially going out the door this week, then I will be able to start taking real bites out of my liabilities.  I'm looking forward to that!   In the meanwhile I am challenged to put a plan of attack into place, and be able to hold myself accountable to that plan.  First things first, lets take a look the numbers we are up against (in order of priority):

Liabilities: $43,100

1. Credit card:  $7500
2. 401k Loan A:  $1960
3. 401k Loan B:  $6330
4. Student Loans:  $27,300

I want to start my focus on the worst of the three, the high interest card...while I can't justify a lot of balance on the credit card, I definitely remember a ski trip to Colorado that accounts for about $1500 of that which I certainly have no regrets for, that trip was unreal!    Other than that, no good excuse really - it just happened, and I need to make sure to be on top of it this time.

The 401k loans took second priority because its interest I am paying back to myself.  I wanted to put the smaller balance ahead of the larger loan to get the sense I am knocking the debt out sooner, another check mark to track.  I figured due to the size of the student loans (lengthening the payoff time), and that there is always the off chance of a default (I don't plan on a possibility of losing my job, but no one does) .  I would also like to get more back into my retirement account anyways.  It would be like a reward to get to this level, getting to contribute more.

Lastly I want to take care of my largest burden, my student loans.  The tax advantages for the interest and its sheer size make me place this third.  This list however also makes up a pretty good debt snowball approach to paying off this debt.  The idea being to start with your smallest balance loan, pay that back with as much as your budget will allow, then apply that payment to the next loan.  After a while you can make payments of much larger chunks of the account rather than the minimums.

I made a quick chart to show what my debt "curve" would look like if, on top of minimums, I committed an additional 500$:

Based on that quick analysis, it would take me 36 months to become debt free...damn that seems like a long time.  The one big difference is that I am in a position to pay this debt down, in a big way.  My living expenses are minimal for now, and I can redirect what those funds would have been into my debt.  I want to be done and done with this much faster than that.  For the time being, I am going to commit myself to try and make it 1k each month over my minimums - that would blow this out of the water in 1.5 years.  I task myself to the 1k, however I still want to contribute more if possible, anything I can really.

As part of my strategy to paying my credit card down, I have now deferred all transactions onto my credit card...everything, from bills to everyday expenses.  I know this will initially make my card balance fluctuate, and add all new velocity to the money, but this will allow me to retain the rewards points that my credit card offers (I'll take a $25 gift card to amazon for 2 months of normal every day costs, its like a reward for paying your bills for a few months).  Ultimately when the credit card balance is down to 0, I would like to continue to manage my expenses in entirely the same way, of course no longer carrying a balance.  However that is still a long ways away!

I will be fighting an uphill battle for quite some time, but the end of the race has been drawn, and now I am at starting gate.  

Here's to the challenge, an additional $1,000.00 per month towards debt.

Since I've been away...

One of my passions besides stock trading has always been the outdoors, whether its camping, canoeing, whitewater kayaking, or hiking, I love it all.  Lately I have been getting the chance to hike a lot more lately, which its great for a ton of reasons - keeps me in shape for one, its absolutely the best way to spend a weekend day and you get some incredible satisfaction from completing a good hike (even a bad one!), and it really only costs as much as the gas you pay to get there.

There are 48 mountains in New Hampshire that exceed 4,000 feet, and I have another personal goal to tag them all.  Currently I have checked 18 off my list, with a whole lot more to go!

Here are some of my favorites from this past winter:

Summit of Mt. Lincoln, N.H.

Summit of Mt. Pierce, N.H., looking towards Mt. Eisenhower and Mt. Washington

Me hiking back up after skiing the Great Gulf, Mt. Washington, N.H.

It's very important for me to always keep life in perspective, as much as we can get caught up on the rat race of life, I find a peacefulness and serenity unlike anywhere else in the Whites.  As much as I dedicate myself to my financial goals, when it comes down to it, its just money.  If you haven't had a chance to give hiking a try, it's never too late to start - and only good things can come from it! Happy hiking!

Progress Bar

I was giving some thought as the best way to keep track of my debt, and I was thinking of a few different scenarios.  Whether I monitor it in straight dollars or if I wanted to do it equity curve style, or percentage.  As for ease of use and updatability I landed on tracking my progress by percentage. In thinking of a style I could track it, I figured the best bet was to measure two goals, first my overall long term goal (the big one, being debt free), then my immediate focus as another.

This will hopefully be a helpful way to track my progress during these first months building towards my first debt target.

As for what do I want out of this blog?  Ideally, this could maybe become a bit of a help for anyone else looking to take big steps towards paying off debt.  It took me a long time to really focus on this, the better part of 6 years (I've basically been in debt since owning a credit card.).  If I run into hang-ups, I want to be able to look at how I worked on it, with the blog holding me accountable!

Heeeeeere's Johnny!

After a long delayed personal hiatus (which was financially prefaced by the Audi catching on fire), I would like to start making contributions back to this blog.  From a new perspective. 

 Instead of starting with the original gimmick that I took out a loan from my 401k since I could not come up with the capital through savings (that didn't work out so well because of these unexpected events, and ended up gone), I am going to take drastic action on my outstanding debt, with a short term goal of knocking that out so I can generate some real savings (of course the big goal is funding the trading account.) 

I want to track my progress to really getting back on my feet financially, and this can where I can hold myself accountable.  I still need to come up with some sort of measurement of progress and how that'll be displayed, but I'll come up with something.  For now, I am just excited to start this back up!

Burnt Car Edition

My car caught on fire this weekend...awesome!

Updates to follow, I don't feel like posting the story quite yet.

Stopped out

The fed day volatility stopped me out on my TNA position after the decision.  I should have been smarter with my order placement, I left my stop on (which I wasn't upset about) rather, I should have gone with my instinct to put a limit price on the top side of my range before the fed announcement as well, just so I wouldn't guarantee myself getting stopped at a poor price.

Another lesson learned.  At least the market paid me back on this one!

+$123.40

Chart update, price targets

I am going to have to figure my game plan going forward.  Where I should set my stop since I am now in the green, but however last trade I ended up placing my stop way too close, and was tripped out in the volatility (before a very large move in the intended direction)  right now I am thinking of leaving the leash where is lies...I am expecing for a larger move positive with a bit more conviction before this counter rally finishes.

My biggest concern is that I am in the mindset that this longer term rally from march is over, with a broken trend line, and weekly divergences in momentum.  I just want to be able to hop in on that as well, and by the looks of it soon.

Long TNA

I am taking a bullish stance for the short term...I am bummed to have been on the sidelines this long while the market was bleeding downward, took a while to wait for a decent opportunity to enter in the market.  I found one with TNA, which was prime for a reversal, plus a pretty low risk entry as it was tracing back to some previous support levels.

Wouldn't you know it?  The market responded to my plan, and it looks like we may have some last remaining bullish sentiment to be shaken out.   My thought is to wait for a day or two up in TNA, and hopefully there will be a textbook H&S patters forming on the indices.

Long 85 shares @ 35.25
Stop under support @ 34.15

Hardest lesson to learn

So far, I think the hardest lesson to learn is when I make a good trading call, however play the trade poorly, and even though I made the correct call/assumption the way the trade was handled means I am either out at a loss or breakeven.  Take my BGZ long for example.  I was stopped out of that trade when I was on my way to work yesterday morning.

My thought on the trade was to place a stop in there to "at least protect my winnings" to make sure if the market made a re-test, I would still be in the green.  Well the market did make a re-test, however stopped me out, than continued exactly the direction I had anticipated.  Now I am stuck with a market going down, when I want to find a good entry with good risk to reward, which I am not sure when that will happen.

I would gladly take a loss simply because I was wrong over this type of mistake, now I am stuck wondering "what if" and I also am tempted to jump on board the impending drop in prices.  I will stay on the sidelines the best I can - I think the market can still surprise some weak bears and cause some short covering to leg the market back up a few bars.  I just hope I didn't miss my mid term entry short.

Playing with fire

I have recently been having more internet access/computer issues - mainly due to the fact that I need to make a new build.  The current computer I have is about 3 years old, and the motherboard, RAM, and CPU have all seen better days.  I will post as much as I can with the tech issues.  Now onto the trading:

I am again trying to hop on board a potential longer trend at its beginnings.  Right now, for evidence is the following on the SPY:

1. Declining volume for the past few months
2. Daily, and the beginnings of weekly momentum divergences.
3. Divergences on the RSI.
4. 20/50 EMA crossover on the hourly chart.

Also we'll have to keep an eye on the currency markets, right now the dollar is being destroyed in value, causing the stock market to trickle upwards as it has been doing.  A reversal in the dollar decline, perhaps coupled with a spike in the VIX and we'll have ourselves a ballgame.

Now lets all root for the Patriots in London!

Weak positions

After my last few trades where it seemed like I was running around with my head cut off, I realized I am trading very weak positions with really easily reached stops, and I have not been patient with the market and letting the proverbial boat pull you.  My thought now after the big drop yesterday was to play a longer term downturn, but I neet to wait for a good entry in the market - my stop will be above yesterday's - and the markets - yearly high. Here's my thoughts:

Wait till there is a favorable risk to reward ratio, right now it looks like the market is headed toards 105.41 at the trendline, the high yesterday was 110.31.  That currently is risking 1.95 points for a potential 2.98 gain...too much risk.

We'll see what the market says.

Silver and gold

There's no way to make or lose money unless you take some action.  The dollar is looking like it may turn, which would crush the run-up in precious metals.  The SLV chart looks more exhausted than the gold chart, and also there's a nice big gap in it just begging to be filled.  I have an open order to buy ZSL, ultra short silver ETF @ 4.78.  We'll see how the charts play out.

Interesting developments

I am watching a few different stocks/indices for some great oppertunities.  Of them, LIZ, SLV, GS and some others look interesting.  However, I came across the charts for the Nekkei and these are some pretty interesting developments:

Let the boat pull you!

Just got my internet connection back together - however my computer is still acting up.  I think the computer overheated a bit in the new desk we put it into recently, because ever since the change it has not run smoothly at all.  My best guess is the motherboard is messed up - still boots and runs, however the on board ethernet no longer works and the whole system has been very touchy.

That being said I also made a very aggressive play into my last trade, and did not have it pay off.  I have wiped out basically all of my earnings so far, and now back to square 1 at 5k.  It wasn't much to begin with, and I am not upset with my trade...just another realization that I need to look for trades in a different way than I have - maily because I do not have the precision to enter a trade on a given notice, it will have to be a predetermined trade.  Although again not a bad thing...the one trade I wasn't watching was the one I had the best entry on (my BRCD trade) - talk about an argument for doing my research and sticking to my guns.  The biggest drawback to this trade in hindsight was not holding it longer, since the upside turned out to being all the way up to 9.80, which could have netted 13%.

My new strategy is to look into non-correlating markets like commodity ETFs, currency ETFs, and different indices out there and spot potential set ups.  Now heres the change...to wait for the set ups to take shape!  When I was learning how to waterski when I was a kid, it was at a family lake and there was a neighbor who used to say in a funny accent "let the boat pull you!"  Now my family all laugh about it years later, but the guy had some dam good advice - you don't control the boat, the water, or your speed.  All you can do is brace yourself for the ride, and make sure you're in the best position to get out of the water.

Here's to making sure I am in the best position to getting out of the water going forward!

Like shooting a bee bee at a freight train

Long SMN into close on Friday:

150 shares @ 10.21

Will hold unless a real convincing new low sets in.

Deer in headlights

I have trying to find out some oppertunities this week in the market, and I haven't been able to pull the trigger on any of the setups that come up.  To my defense I was pretty late in catching these developments, and would only be a trade chasing the tail of the breakout that already happened.  

I will keep an eye on the charts yet again today, not much conviction in a direction however.  I do have a short term bullish bias now after seeing the strength to the rebound, and taking a look, it appears the long term trend line for the spy was never broken.  That being said, I think this rally is going to run out of steam soon, and will be looking to accumulate some short positions in advance when the chance comes up.

Perhaps today is a buy day for a short term swing?  Market is taking a breath for now - I'll update my positions page if I jump on anything, but the market is out of focus for me right now, I can't quite jump onto anything feeling this out of sync.

You might call it a blur:

Sold

Stock: SRS

10/06 Buy 300 shares @ 10.29
10/06 Sell 300 shares @ 10.26

Bad entries mean a whole lot of added stress on the trade - it could have been positive with a more controlled entry.

However it looks now with AA's earnings in that we are back into some solid bullish momentum.  I will be looking at some long chances with:  UMC, APT, DSX, TBSI, AZK, TLB, and WYN

Stewie has a good point, it looks like the market leaders are on their way up, and today's action definitely goes to the bulls.  Happy trading!